Phorm – back from the dead?

“Rumours of my death have been greatly exaggerated” is a phrase I believe first used by Mark Twain. I was reminded of it this morning by reports of Phorm‘s resurgence.

As a reminder, Phorm is a UK based online adveritising business that works by cutting deals with ISPs to monitor your surfing habbits. In this way they build a profile of individual users and then target ads against that profile. They have become embroiled in privacy issues when some of the trials they were running didn’t make it easy enough for users to opt out. As a result their share price has crashed 86% this year.

Until yesterday.

Yesterday, on news that BT was going to take it’s trials to the next stage Phorm’s shares surged 40%. Now this morning the Guardian is reporting that Virgin Media is still working with the company.

My take on this has been that Phorm’s apparent lack of concern over privacy issues has created sufficient media outcry that life was likely to remain very difficult for them. That still might well be the case – the BT and Virgin announcements both fall well short of a commitment to use Phorm in anger – but clearly there is still some potential.

Overall I am with Scott McNealy when he says “you have no privacy, get over it”, and the company that is successful in bringing the public to that point of view will do very well. My belief is that the best way to do this is via the side door, building trust slowly and then asking people if they mind giving up access to their private data. Phorm’s approach has been more through the front door, with a battering ram, but maybe, just maybe, they will prevail.

If so, that will be good for all of us in this industry as anything that increases the effectiveness of advertising increases the size of the market we are operating in.